Postal Rates To Stay The Same, Might Even Drop

The United States Postal Service’s (USPS) leadership has publicly committed to having no general price increases for letter and flat mail in 2016. An overall price decrease for such mailings is possible for later in the year.

The news follows an announcement earlier this year that USPS will begin increasing costs for shipping services, which are priced separately from flat and letter mail, by an average of 9.5 percent in January, according to Stephen M. Kearney, executive director of the Alliance of Nonprofit Mailers (ANM) in Washington, D.C. Potential savings might come down the pike in the form of a rolled back 4.3 percent exigent surcharge that all mailers have been paying for the past year and a half, Kearney said.

The surcharge was developed as a means to make up for volume USPS lost during the recession and to online services such as email, Kearney said, and is expected to meet its target of $4.9 billion in April.

USPS representatives have advocated for making the surcharge permanent, but have since acknowledged that the surcharge will likely end, according to Kearney. “This will be the first across-the-board price reduction in postal service history,” Kearney said. “It will be a big deal. A lot of nonprofit mailers are looking to do their budgets in 2016 and we’re telling them to plan for a postal reduction in 2016, but, to be safe, some are keeping it in their budgets.”

Further pricing changes could be coming in 2017, Kearney said, as the Postal Regulatory Commission is scheduled to review the Consumer Price Index cap on mailing services and other aspects of pricing regulation in December 2016. While USPS and other entities are likely to support changes in regulations that will allow for price increases, ANM will attempt to keep costs as they are, according to Kearney. “2017 is going to be a very important year for nonprofit mailers because we’ll have a regulatory review and possible changes to postal regulations,” Kearney said.

 Source: http://www.thenonprofittimes.com/news-articles/27376/

Postage Update

Originally, the exigent price increase that took place in January 2014 in order to recoup losses from the depression was set to expire in August of this year.  Due to a recalculation of the actual loss incurred, the PRC (Postal Regulatory Commission) has ruled that the USPS is entitled to collect an additional $1.191 billion.

As a result, postage rates will remain the same for the rest of 2015. Based on current volumes, it will take the USPS approximately 8 to 9 months to collect the additional $1.191 billion in losses. That means that the exigent rates should expire in the April 2016 timeframe.

The last rate increase for market-dominant products went into effect on May 31, 2015. If the USPS requests an increase for April 2016, it would go into effect at the same time that the exigent rates expire. The result would be a probable decrease in postage rates by about 3%.

We will keep you updated on any further developments.

Content Credit:  The Berkshire Company  www.berkshire-company.com

Postage Rate Increase – May 2015

On May 7, 2015 the PRC approved a rate increase applied for by the USPS.  The increase goes into effect May 31, 2015 and applies to all classes of mail. On average the increase is less than 2%.  The increase for Standard Mail is about 1/3 to 1/2 a cent and First Class Mail is about a penny.

Your increase will depend on factors such as sort level and where your mail is dropped – locally or at a SCF (Sectional Center Facility)  or NDC (National Distribution Center). Mail drop shipped to those facilities can expect discounts from $0.03 to $0.04.

EDDM (Every Door Direct Mail) goes up to $0.183.  The second ounce on First Class Mail continues to be free.

For a rate chart comparing existing rates with the new rates please click here.

NOTE:  There may be a postage decrease later in 2015.  The exigent price increase that went into effect in January, 2014 is expected to run out late summer or early fall of this year.  The matter is presently in litigation, but if the rollback is approved, postage may go down by roughly 4%.

Regulators approve US Postal Service price increases set for April

Postal regulators in the United States have given the green light to Postal Service price changes planned to take effect from 26 April, 2015.

The Postal Regulatory Commission approved both adjustments to First Class Mail services as well as for competitive express and parcel shipping changes.

The First Class Mail retail service will remain at 49c, but with additional ounces increasing from 21 to 22c, and postcards rising to 35c.

On average, First Class Mail rates will rise by just under 2%, with presorted letter and card rates rising by 2.422%, flats by 2.437% and parcels 10.18%.

Other changes in the monopoly side of the business will see outbound international single-piece First Class Mail letter rates rise by 5c (or 4.399%) to $1.20, with outbound international postcards also rising to $1.20.

The changes include the “exigent” temporary surcharge designed to help USPS counter the financial impacts of the 2008-09 recession.

The Postal Service had proposed back in January a range of changes to its monopoly service prices, but the regulator has deferred approval for rate changes to Standard Mail, Periodicals, monopoly Package Services and Special Services (such as address correction), requiring more information from the Postal Service.

Competitive services

On the competitive side of the business, the Postal Regulatory Commission approved proposals to maintain current pricing for both retail and commercial Priority Mail and Priority Mail Express services

Prices will increase for other domestic parcel shipping services including Parcel Select (up 9.8% on average, depending on options), Parcel Return Service (up 4.8% on average) and First Class Package Service (up 5.1%).

First Class Package Service is currently a monopoly product that USPS is requesting be moved to the competitive portfolio to give it more pricing flexibility, and the Commission is still reviewing the request. If it is allowed, prices would rise by 22%.

Other price increases include Standard Post (up 11.3% on average), and various Special Services such as Premium Forwarding Service (up 5.9%).

International shipping services will also see price increases, including Global Express Guaranteed (up 7.2%) and Priority Mail Express International (up 6.7%).

Priority Mail International will see prices rise by 5.5%, with International Priority Airmail rising by 4.5% and Airmail M-Bags by 6.8%. First-Class Package International will see a 7.2% price increase.

“Strength in our system”

Speaking at the Direct Marketing Association’s Washington Nonprofit Conference yesterday, the acting chairman of the Postal Regulatory Commission, Robert Taub, commented that the Postal Service was starting to see modest increases in revenue, particularly driven by growth in its shipping and package services, propelled by e-commerce.

“In the postal world,” he said, “we’ve been hearing nothing but bad news. I want to highlight, there is good news and strength in our system. The Postal Service as you all know, is a key cog of a marketing and distribution system through which small and large businesses, nonprofit organizations, and consumers can transact business, advertise services, and distribute products.”

According to preliminary unaudited figures for January 2015, the Postal Service has grown its revenue by 3.7% in the year-to-date (starting 1st October), to $24.6bn, but increases in operating costs have seen losses worsen year-on-year by 54% to $2.1bn.

Mail volume grew by 0.5% year-on-year in the four months, while shipping and package volumes grew by 11% compared to the same period last year. The important First Class Mail service saw its revenue up 4.1%, while volumes dropped by 0.5% in the four months compared to the same period in the previous year.

The Postal Service has told regulators that monopoly service price increases should bring in about $400m extra in revenue this year, with competitive service price changes adding an additional $315m.

Source: Post&Parcel/PRC/USPS

Postal Service Files Market Dominant Price Change

Proposes an Additional $0.9 Billion in Annualized Contributions

WASHINGTON  ̶  On January 15, 2015 the Postal Service filed with the Postal Regulatory Commission (PRC) a Market Dominant price change based on a Consumer Price Index (CPI) cap authority of  1.966%.

The Postal Service believes strongly in the value of mail and maintaining relevance for today’s customers, offering reasonable pricing, workshare incentives, and meeting its obligation to the American public to strengthen its financial condition.

All of the proposed price changes are based on CPI prices plus the Exigent Surcharge approved by the PRC in Docket Nos. R2013-10 and R2013-11.

Using the CPI, we estimate that this price change will generate an additional $0.9 billion in contribution on an annualized basis.  If the PRC approves the filing, the proposed April 26, 2015 implementation of the prices will improve the FY 2015 financial outlook by $0.4 billion in contribution.

The key elements of the CPI case include the following:

• Above average price increases to address PRC concerns about underwater products
• Special Services simplification to reduce redundancy and improve customer ease of use
• Introduction of a separate Flats Sequencing System (FSS) pricing structure for Standard Mail and Periodicals
• Introduction of Carrier Route bundle and container pricing for non-FSS flats for Standard Mail and Periodicals
• Include four promotions (Earned Value Reply Mail, Color Transpromo, Emerging Technologies, Mail Drives Mobile)

Various industry webinars will be scheduled to offer depth and insight into the proposed changes.

In November, the Postal Service filed for the transfer of First-Class Mail Parcels to a competitive product and the elimination of Return Receipt for Merchandise as a special service.  These matters are still pending with the PRC.  For the purpose of this filing we are assuming that these products will remain in the Market Dominant category.

IMPORTANT NOTE:

The Postal Service has filed with the United States Court of Appeals an argument to make permanent the 4.3% exigent price increase that was implemented in January, 2014.  That increase is scheduled to expire later in 2015 and could result in an actual reduction in postage at that time.   The expected outcome of the appeal cannot be determined at this time.

Postal Rates Will NOT Increase in January 2015

At today’s Association for Postal Commerce meeting Postmaster General, Pat Donahoe, announced that the USPS® will not be filing for a new price change in January.

He also informed the group that they would wait until early 2015 to reexamine the option. This means that current rates would not change and the earliest an increase could happen would be March 2015.

Follow this blog for further updates.

Will There Be A Postage Increase in 2015?

We have had several clients asking about 2015 postage and whether or not there will be a January increase.  The fact is, nobody knows for sure at this point.  Following are several possible scenarios.

The USPS has the option to file for another CPI (Consumer Price Index) rate increase which historically becomes effective in January. Based on the recent CPI trends and assuming CPI stays fairly steady, based on the formula requirements, the CPI increase will be between 1.3 – 1.5%.

However, the USPS does not have to increase postage in January. They could wait until later in 2015, which may allow CPI to increase and file for higher rates later in the year.

A critical issue is the exigent increase allowed in 2014 to counteract the loss of revenue due to the recession.  Once that revenue is recouped – about $3 billion  – presumably sometime in the third quarter, postage would be rolled back by about 4.3%.  The USPS is attempting to keep that increase in tact and the issue will most likely be decided by the PRC.

If the USPS loses their exigent surcharge appeal they might wait on the CPI filing, allowing CPI to climb and apply the increase at the same time as the exigent surcharge removal.

We will post more information on this blog as details emerge.

Eight Point Plan to Mail Smarter in 2014

With the 2014 postage increase have come some challenges.  Specifically, what can mailers do to help reduce the impact of the postage increase?  We have come up with an eight point plan to help do just that.  This content was originally mailed to our clients and prospects in a booklet.  It is now posted online for our social media and online friends to view.  Just click this link: http://ereply.us/2014Postage

2014 Postage Rate Tables & Increases

Here are the 2014 postage rates that take effect on January 26, 2014.  The table contains both the new rates, 2013 rates and variances by dollar amount and percentage.  First class and standard mail both have average increases of just under 6%.  The PRC approved the USPS request for an exigent price increase.  Without that, the increase would have been no greater than the Consumer Price Index which is under 2%.

View here in PDF format:

http://ereply.us/2014postage.pdf

Watch for an upcoming post on several steps you can take to reduce the effect of these rate increases.

2014 Postal Rate Increase

Regulators on Tuesday approved a temporary price hike of 3 cents for a first-class stamp, bringing the charge to 49 cents a letter in an effort to help the Postal Service recover from severe mail decreases brought on by the 2008 economic downturn.  The cost for a second ounce of first-class mail was increased to 21 cents.  However, for automated first-class mail, the second ounce remains free.

Bulk mail, periodicals and package service rates will rise 6 percent. The actual rate charts have not been published as of this writing.  They will be posted on this blog as soon as they are available.

The new price of a postcard stamp, raised by a penny to 34 cents in November, also is effective next month.

The last price increase for stamps was in January, when the cost of sending a letter rose by a penny to 46 cents. A post card also increased by one cent to 33 cents.

Our take on the issue
As an industry, it places greater emphasis on the necessity to optimize postage for our customers, utilize drop shipping and take extra steps in data processing like scrubbing the data and better targeting.  Additional steps include prudent use of return mail endorsements, address correction service (ASC) and active analysis of mail tracking to determine if some first class mail can be converted to standard.  If the postal increase forces the industry to adopt these measures, we may find ourselves conducting smarter mailings that, in the end, could more than offset the increase.

Are You Eligible for a USPS Tech Credit?

The USPS has a new program in which mailers can receive a one-time postage credit if they have met specified mail volumes during the period from October 1, 2011 through September 30, 2012.

Program Overview
In order to encourage mailers to convert to Full-Service mailing standards, the Postal Service is proposing to offer a Full-Service Technology Credit, commonly known as a Tech Credit. If approved by the Postal Regulatory Commission, Tech Credits may be redeemed as a postage credit during a 12-month period when a qualified business location submits a postage statement that contains 90%-or-more Full-Service pieces.

Qualification Process
Historical mail volume from October 1, 2011 through September 30, 2012 has been evaluated for every business location, as defined by its USPS Customer Registration Identification Number (CRID). Regardless of each mailer’s current Full-Service status, qualifying mail volume for all Permit Holders and Mailing Agents (as defined on a postage statement) has been totaled across each business location’s permit profile.

Each business location that exceeded 125,000 pieces of qualifying mail volume during the evaluation period will be eligible to redeem one (1) Tech Credit amount.

Note: No mailer needs to opt-in or register for the Tech Credit program. USPS will consider all permits and all CRIDs.

How Do I Know if I’m Qualified?
Notification letters were mailed during March 2013 to qualifying business locations at the addresses the Postal Service has on-file.  You can view a copy of the letter here:  http://ereply.us/tc.pdf

For specific information regarding your business location’s eligibility status, please use one of the following options:

• Click the link below to initiate an online inquiry.
• Call the PostalOne! Help Desk at 1-800-522-9085 and select the “Tech Credit” prompt.
• Email the PostalOne! Help Desk at postalone@usps.gov.

Redemption
The Tech Credit redemption period is currently proposed to run from June 1, 2013 through May 31, 2014. During this period, a qualified business location may redeem its Tech Credit amount as a postage credit on a postage statement that meets the following criteria:

• The Permit Holder permit, or paying permit, is linked to a qualified business location.
• The postage statement contains 90%-or-more Full-Service pieces.
• The postage statement submission type is Mail.dat or Mail.XML.

Any unused Tech Credit amounts will expire on June 1, 2014.

For more information please view:
https://ribbs.usps.gov/intelligentmail_latestnews/documents/tech_guides/techcredit/techcredit.htm

To find out if you qualify, here is an online form you can submit:
https://prodpx-promotool.usps.com/promoreg/campaignView.do?campaignId=TECHCREDIT

2013 Postage Rate Chart

We posted in an earlier blog that postage rates for all First Class, Standard and Non Profit mail would be increasing about 2.5% beginning January 27, 2013.  Details of these rates and applicable discounts for automation and destination entry drop shipping are available.  You can view the chart here:  http://ereply.us/2013Postage.pdf

Reminder of 2013 Postal Changes

With the new year almost upon us, we thought we should quickly review USPS changes coming in the new year.

Mail Piece Dimension Change:  The size for folded self-mailers changes on January 5, 2013.  The new maximum is 10 1/2 x 6 inches.  Anything larger than that will be subject to a substantial postage increase.  Read the entire post here:
https://gofranklingo.wordpress.com/2012/08/10/mail-piece-dimension-changes-take-effect-january-2013/

Postal Rates Increase on January 27, 2013:  First class mail goes up a penny and standard mail about half of that.  Don’t forget that the second ounce on first class mail is still free.  Here’s the detail on the rate increase:
https://gofranklingo.wordpress.com/2012/10/15/usps-proposed-rate-increases-for-business-mail/

USPS Promotional Calendar:  The USPS has announced a full calendar of promotional events that can help you save on postage throughout 2013.  To see if you might qualify, check out the details here:
https://gofranklingo.wordpress.com/2012/11/08/2013-usps-promotions-incentive-programs/

If you have any questions about these or other direct mail or postage issues email us at info@gofranklingo.com or call (800) 375-0504.

USPS Proposed Rate Increases for Business Mail

By now most have heard that the price of a First Class stamp will increase to $0.46 in January.  The rates for business mail – automated presorted mail – will also increase.

First Class mail will increase about $0.01 per piece or roughly 2.6%.  Standard mail will go up  $0.004 per piece for an average increase of 1.6%.  The USPS is limited to postage rate hikes no greater than the rate of inflation which is currently 2.6%.  The second ounce for First Class mail will continue to be free.

With every rate increase, it becomes more imperative that mailers take every opportunity to optimize their mail data.  To view our blog post on that subject please click on this link http://bit.ly/TnIB2w .

To view a chart with more detail about the proposed increase please click http://ereply.us/2013Postage.pdf.  The new rate is scheduled to go into effect on January 27, 2013.

Are You Optimizing Postal Processing to Lower Costs and Improve Mail Deliverability?

As U.S. postal rates continue to rise each year direct marketers are continually challenged to offset these costs, which can represent up to 65% of total direct mail project budgets. Yet many marketers fail to focus their cost-reduction efforts on postage, trying instead to reduce expenses involving printing, materials and other campaign elements. Only by focusing more on reducing postage costs and optimizing campaigns will marketers be able to proactively manage budgets for profitability while still maintaining the integrity of their direct mail programs.

It will be up to marketers and their industry partners to find ways to lessen the hardships created by escalating postal costs. No longer can postage be considered a “pass-through” cost over which marketers have little or no control. This would lead to dwindling budgets for program execution and less effectiveness overall for direct mail. It also could potentially move customers to look more closely at other marketing platforms that could be viewed as economically advantageous due to the rising costs of print mail.

In addition to examining creative ways to reduce the cost of postage itself, the overall optimization of a campaign has become paramount. Diminished consumer response rates, postal waste due to the large amount of undeliverable-as-addressed mail and inefficiencies in the National Change of Address system pose their own unique challenges, as does the movement toward environmentally friendly business practices to reduce paper usage.

Smart marketers already have begun meeting these challenges by aggressively integrating postal optimization, logistics strategies and campaign optimization techniques that not only promise to curb postal costs but also to improve address accuracy and enhance response rates, contributing significantly to the ultimate success of a campaign.

It is possible to significantly reduce postage costs while still guaranteeing highly accurate and fast delivery of mail. The key is to take advantage of new, cost-saving production and mailing techniques available today, including:

• Aggressive presorting programs that maximize postal discounts
• Data hygiene, or campaign optimization, programs that help reduce waste caused by undeliverable mail or incomplete addresses; and
• Other logistics strategies such optimal packaging, targeted in-home delivery dates, load planning, reporting and standardized interfaces that determine the most efficient trucking and transport options.

Despite the tools and technology available, many marketers have yet to fully integrate a comprehensive postal optimization plan. Marketers need to ask themselves, “Is my service provider truly moving my mail as effectively and cost-efficiently as possible, given the realities of the economy today?”

It is important for any provider to demonstrate its qualifications and experience as a total solutions provider, delivering streamlined, optimized mailing strategies, as well as trigger mailing tools and the latest in digital printing techniques. In addition, providers must have the resources and industry experience to provide clients with the benefits of the latest data hygiene and intelligent mail technologies, including automated and/or Web-based processing and interface systems that help the USPS process mail more efficiently, resulting in cost savings.

Comprehensive postal and campaign optimization plans not only offer the best defense against escalating postage costs but also provide ways to increase speed to market, improve response rates and enhance the overall effectiveness and return on investment for mailing campaigns. Those marketers that insist on such proactive approaches will be most likely to succeed in today’s competitive marketplace.